Lake Worth Creates new Retirement Plan

Second Public Hearing Tuesday, August 21 – Cash Balance Plan Created.

Effective October 1, 2018, there is hereby added a Cash Balance Plan feature (“Cash Balance Plan”) to the City of Lake Worth Employees Retirement System, set forth in Sections 16-44 through 16-50.

All employees who are hired on or after October 1, 2018, and all employees hired before that date and after September 30, 2010, who elect to participate in the Cash Balance Plan pursuant to Section 16-26(c), shall be subject to the provisions of the Cash Balance Plan. The Cash Balance Plan is intended to meet the applicable requirements of Internal Revenue Code Section 401(a), hereinafter referred to as “Code Section”. The Plan is a “governmental plan” within the meaning of Code Section 414(d), and as such, is exempt from the Employee Retirement Income Security Act of 1974, as amended.

Except as otherwise provided below, the terms of the City of Lake Worth Employees Retirement System shall apply to the Cash Balance Plan. 16-45 – Contributions, Benefit.

• (a) Employees shall contribute five percent (5%) of their compensation to the Cash Balance Plan.

• (b) The City shall contribute such amounts as are actuarially required to fund Plan benefits. The Cash Balance Normal Retirement Benefit for each employee shall be equal to a hypothetical account at such employee’s Normal Retirement Date. The hypothetical account shall be credited with an allocation of ten percent (10%) of each employee’s compensation, plus a hypothetical interest credit of five percent (5%) per year. Interest will be credited quarterly at an effective quarterly rate of 1.2273 percent per quarter.

• (c) Employees shall not have the option to receive the employer contribution as cash.

• (d) In addition to the contributions outlined above, the City shall contribute such sums as are necessary to pay the administrative costs of the Cash Balance Plan.